In a recent ruling regarding mismatch in the claim of Input Tax Credit (ITC) as per Form GSTR-3B and the auto-populated GSTR-2A, the Madras High Court directed the Petitioner to pay 10% of the disputed tax amount while passing an order for re-adjudication by the tax authorities on the basis of new material. The Nilgiri Dairy Farm P.Limited, (Nilgiri) filed a Writ Petition and two Writ Miscellaneous Petitions before the Madras High Court impugning Orders passed by the Respondent. The Petitioner had filed their returns and paid appropriate taxes for the relevant period under consideration, but was subject to audit following an authorization by the joint commissioner in terms of Section 65 of the Goods and Service Tax Act, 1961.
Read More: Post-Inspection GST Registration and Payment of Tax not “Voluntary”: Madras HC The Audit revealed numerous discrepancies including mismatch between GSTR-3B and GSTR-2A; GSTR 1 and GSTR 3B; non-payment of Tax under the Reverse Charge Mechanism (RCM); non-reconciliation of payment in Form GSTR-9C among other allied issues. The Petitioner was subsequently served notice in DRC 01 and given opportunities for personal hearing, following which the defects of Mismatch between GSTR 1 and GSTR 3B, Other income treated as consideration received and Reversal of input tax credit on purchase returns were confirmed against the Petitioner. Get a Copy of Direct Taxes Law and Practices Including Tax Planning with Free E-Book Access, Click Here
R.Kumar, appearing for Nilgiri sought that the matter be remanded back to the adjudicatory authority citing the decision of the Madras High Court in of Sree Manoj International Vs. Deputy State Tax Officer (2024), while seeking a final opportunity before the adjudicating authority to raise their objections towards the proposal in the impugned order. G.Nanmaran, Special Government Pleader appearing for the Respondent raised no objections against the proposal put forth by the Petitioner. Read More: Under declaration of Ineligible ITC: Madras HC directs to lift Bank Account proceedings on 10% Pre-deposit The Madras High Court Bench presided over by Justice Mohammed Shaffiq set aside the impugned order and the consequential demand order while directing the Petitioner to deposit 10% of the disputed taxes along with other compliance measures, the fulfilment of which shall grant the Petitioner another opportunity to submit their objections towards the Respondent who shall pass a fresh order on the basis of any supporting documents or material that are to be produced by the Petitioner.